Question1. Examine carbon emissions for the province of Nova Scotia. Let E = tons of carbon emissions. For the province, the marginal abatement cost (MAC) for carbon emissions is given by the following equation: MAC = 600 – 2E. The marginal damages (MD) of carbon emissions are estimated to be: MD = – 100 + 2E. a) (3 points) What is the threshold level of emissions where damages begin to occur? b) (2 points) How much carbon would be emitted without any regulation in place? c) (3 points) What is the socially efficient level of emissions? d) (3 points) What is the optimal tax per ton of carbon? e) (8 points) If the optimal tax on carbon is in place, what are the total social costs (total abatement cost (TAC) + total damages (TD))? How much tax revenue would be raised? f) (8 points) If the carbon tax is set at $400 per ton, what are the total social costs (TAC + TD)? How much tax revenue would be raised? g) (8 points) If the carbon tax is set at $100 per ton, what are the total social costs (TAC + TD)? How much tax revenue would be raised?
